Start with two numbers
Subtract all debt secured by your home from a realistic estimate of its market value. Include a second mortgage or an outstanding HELOC balance, not just the first mortgage.
Home / The basicsTHE MYHOMEEQUITY TOOLKITYour equity.
Your equity.
Without the mystery.
Understand the difference between your home’s value, what you owe, and the portion that belongs to you. Start here before comparing ways to borrow.
Start Here
What Is Home Equity?
One home. Two parts of the picture. This illustration separates the outstanding loan balance from the remaining equity.
Home Market Value $500,000
Mortgage Balance − $275,000
Your Home Equity = $225,000
The difference belongs to you.
Home equity is the difference between a home’s current value and the balances of loans secured by it. The amount can rise or fall.
Market value − Secured balances = Equity
In this example, a $500,000 home minus $275,000 in secured debt leaves $225,000 in equity. That is an ownership value, not money sitting in a separate account.
Only the principal portion of a mortgage payment reduces the balance. Interest, escrow, and fees do not build equity. Changes in the housing market can also affect the value you hold.
Try it with your numbers ↗PUT IT INTO PRACTICE01 02 03 Explore the guide library ↗
Build understanding before you build a plan.
Know what can change
Paying down principal can increase equity. Market changes can increase or reduce it. Improvements do not necessarily add value dollar for dollar.
Separate equity from available cash
Equity is not a bank balance. Accessing it through borrowing adds debt; selling involves paying off secured loans and transaction costs. Neither route delivers the full headline number automatically.